CEBU INTERNATIONAL FINANCE CORP (CIFC) v.

CA; VICENTE ALEGRE

12 October 1999; Quisumbing, J.
FACTS
VICENTE ALEGRE had money market placements with CIFC, for which he was
issued a promissory note for P516,238.67 and later a check drawn against the CIFC
account with BPI to the amount of P514,390.94.
When ALEGREs wife deposit the check with RCBC, BPI dishonored the check
for being subject of an Investigation. BPI had taken custody of the check pending
an investigation of several forged checks drawn against CIFCs account. ALEGRE
demanded the payment of the placements from CIFC but the latter merely
instructed him to await the pending investigation, and later offered to replace the
check but on the impossible condition that ALEGRE return the check.
ALEGRE filed a complaint (CIVIL CASE No. 1) for recovery of sum of money
against CIFC. Meanwhile, CIFC had filed a complaint (CIVIL CASE No. 2) against BPI
for unlawful deductions on counterfeit checks, amounting to P1,724,364.58. The
complaint prayed in part for the recovery of the amount of the check paid to
ALEGRE but dishonored by BPI. CIFC filed a third-party complaint against BPI in CIVIL
CASE No. 1 but this was dismissed on BPIs motion due to the pending CIVIL CASE
No. 2.
CIVIL CASE No. 2 ended by Compromise Agreement to the effect that BPI
would credit the account of CIFC by the amounts alleged as unlawfully paid, and
debit by the amount of ALEGREs check, representing the discharge of the subject
check. This fact was introduced in evidence in CIVIL CASE No. 1 but the proceeds as
well as the check remained in the custody of BPI.
BPI would later filed a separate collection suit (CIVIL CASE No. 3) against
ALEGRE, alleging that the latter had connived to forge CIFC checks. The records are
silent as to the result of this case.
The trial court in CIVIL CASE No. 1 rendered judgment in favor of ALEGRE.
This was affirmed by the CA.
ISSUES-HELD-RATIO
WON Article 1249 of the Civil Code applies: YES

CIFC contends that what should apply are the provisions of the Negotiable
Instruments Law and other special laws on money market transactions, under
which it has already discharged from liability in paying the value of the check
inasmuch as:
o
o
o

There was acceptance of the check by BPI, making the bank

primarily liable thereon and discharging CIFC;
BPI had not validly dishonored the check; and
The act of BPI in debiting the CIFCs account served to discharge the
latters liability.

CIFC relied on Section 137 of the NIL, which reads:

Liability of drawee retaining or destroying bill - Where a drawee to
whom a bill is delivered for acceptance destroys the same, or refuses

within twenty-four hours after such delivery or such other period as the
holder may allow, to return the bill accepted or non-accepted to the
Holder, he will be deemed to have accepted the same.

Under this section, BPI has accepted the instrument such that its offsetting
of the value of the check against the losses incurred from the forged checks
allegedly made by ALEGRE, resulted in the obligation being deemed paid.

The Court ruled that Article 1249 applies as the same provides for the
medium of payment of debts and money market transactions partake of
the nature of a loan, though it is done through a middleman.
In the present case, payment of the loan by check was allowed by the
creditor but the same was dishonored for being subject of an investigation.
In such case, after notice of dishonor, the holder has a right to recourse
against the drawer and may file an action for the recovery of the value of the
check.

Mere delivery of checks does not discharge the obligation under a judgment.
The obligation is not extinguished and remains suspended until the payment
by commercial document is actually realized. (PAL v. CA)

WON the check was validly discharged: NO

Although the value of the check was deducted from the account of CIFC, it
was not delivered to the payee but instead offset against the losses incurred
by BPI for alleged forged checks made by ALEGRE. This confiscation was
agreed upon by BPI and CIFC, in their Compromise Agreement.

This Agreement could is unenforceable ALEGRE as he was not a party thereto.

Though his money was in the custody of BPI, the bank could not appropriate
the money as its own. This arrangement constitutes a garnishment which
should be sought in the proper proceeding.

CIFC has not effected a valid tender of payment to ALEGRE. Such tender
involves a positive and unconditional act and cannot be presumed by a mere
inference from surrounding circumstances.

WON the dismissal of the third-party complaint against BPI was valid: YES

The Court found that there was identity of parties and rights asserted
between CIVIL CASE No. 2 and the third-party complaint in CIVIL CASE No. 1,
such that judgment rendered in one would be res judicata in another. Thus, it
upheld the dismissed of the third-party complaint.

The Court also found that the stipulations in the Compromise Agreement
entailed that CIFC abandoned its claims against BPI.

Petition DENIED. CA Decision holding CIFC liable to ALEGRE for the amount of the
check AFFIRMED.